Canada's Minister of Finance Jim Flaherty today tabled the federal government's spring budget describing it as "prudent, disciplined and realistic" and "focused on preparing Canada and Canadians for the challenges ahead".
No new tax cuts were announced. However, the Minister reaffirmed the government's commitment contained in the October 30, 2007 Economic Statement to its long-term plan to reduce federal corporate tax to 15% by 2012 saying "this bold initiative will give Canada the lowest overall tax rate on new business investment in the G7 by 2010". The goal is to achieve a combined Canadian federal-provincial corporate tax rate of 25% by 2012.
Other tax measures of interest include rules to facilitate transfer of Canadian sited property by non-residents of Canada, the gains from which would be treaty exempted, by excluding such non-resident transfers from Canada's onerous reporting and tax filing rules, enhancing depreciation rates for manufacturing and processing and clean energy generation equipment, and extending mineral exploration credits.
In emphasizing the government's resolve to fiscal responsibility, the Minister noted that growth in the Canadian economy was strong through the first three quarters of 2007. However, the Minister raised a note of caution as to Canada's immediate economic outlook which he said faces several risks from external factors such as a slowdown in U.S. demand resulting from a U.S. recession and turmoil in global financial markets. Reduced global economic growth, together with the higher Canadian dollar, rising energy prices and low cost producers in developing countries threaten to decrease the competitiveness of Canadian exports.
In recent weeks, economic forecasters had predicted that the Canadian government had little money to spend in the 2008 budget. Budget 2008 will be remembered as a "small" budget which allocated government resources cautiously to strategic expenditures and insured, through provision for relatively substantial debt repayment ($10.2 billion), the government's continued attention to "economic fundamentals".
For a more detailed analysis of the 2008 budget changes,
please go to our website at:
http://www.blgcanada.com
To access the government's budget documents, please go to: http://www.budget.gc.ca/2008/plan/table-eng.htm
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